FSB Warns: Crypto Nearing Tipping Point With Finance – Coincu

Key Points:

• FSB Chair says crypto may soon pose systemic risk as ETFs and stablecoins deepen financial ties.
• Crypto ETFs make investing easier, increasing retail participation and linking digital assets to global finance.
• Stablecoin issuers holding U.S. Treasurys influence short-term yields, prompting closer monitoring by global regulators.

The Financial Stability Board (FSB) has warned that the growing connection between the crypto industry and traditional finance may soon reach a critical stage. Speaking in Madrid on Thursday, outgoing FSB Chair Klaas Knot said the sector does not yet pose a full systemic risk, but that status could soon change.

“We may be approaching a tipping point here,” Knot stated, addressing how closer integration between crypto and mainstream finance increases potential risks. He cited the rapid expansion of crypto investment options and the broader involvement of traditional financial institutions as key areas to watch.

Crypto ETFs Lower Entry Barriers

Knot pointed out that retail access to crypto has expanded quickly due to the launch of crypto exchange-traded funds (ETFs). These financial products allow investors to gain exposure to digital assets without directly handling private keys or using crypto wallets.

By simplifying access, crypto ETFs have increased participation from investors who previously avoided the sector due to technical or security concerns. This wider reach is accelerating the sector’s growth and deepening its ties to the broader financial ecosystem.

Stablecoins Deepen Crypto-Finance Ties

Stablecoins are another area the FSB is closely monitoring. These digital assets are pegged to fiat currencies like the U.S. dollar and often backed by real-world assets, including U.S. Treasurys. “That’s a segment that we clearly must monitor closely,” Knot said, noting the size and scale of stablecoin issuers’ Treasury holdings.

A recent paper from the Bank for International Settlements supports this concern. It found that stablecoin inflows can lower short-term Treasury yields, while outflows increase them. The effect is more pronounced for shorter-term bonds and has the largest influence from USDT and USDC.

Regulatory Focus and Leadership Change

Knot will step down as FSB Chair and president of the Dutch central bank on June 30. Bank of England Governor Andrew Bailey will take over the FSB role, while the Netherlands has not yet named a successor.

Meanwhile, regulatory efforts in the U.S. are gaining momentum. As CoinCu reported on Wednesday, the Senate voted 68–30 to advance the GENIUS Act, which would set a national framework for stablecoin regulation. If passed, the bill could improve clarity for U.S. dollar-backed stablecoin issuers and strengthen the U.S. position in the global digital asset space.